ACCC says Viterra's ports need auction system

Aug. 18, 2011
-
by World Grain Staff

Share This:

SYDNEY, AUSTRALIA — The Australian Competition and Consumer Commission (ACCC) recently released a draft decision on arrangements for wheat exporters at Viterra’s six wheat export ports in South Australia. The preliminary view is that the introduction of an auction system would address the ACCC’s main areas of concern.

Viterra had submitted an undertaking that proposed to continue current arrangements. However, the ACCC considered that the continuation of the existing first come, first served system (FCFS) for allocating shipping slots was not appropriate.

“The ACCC was concerned that current practices result in outcomes that do not benefit Australian wheat growers nor the Australian economy,” said ACCC chairman Rod Sims.

The ACCC said that problems with the FCFS system are apparent in bookings for the peak shipping period of January to April 2012. With a large harvest anticipated, exporters seeking to access the port terminals to export would find that all available capacity would be allocated to only two exporters at Viterra’s deep sea terminals during the peak shipping period.

This would impact on the level of competition in the wheat trading market, possibly resulting in lower prices for wheat growers, the ACCC said.

In response to suggestions from the ACCC, Viterra has submitted a revised draft of the undertaking introducing an auction system from mid May 2012.

To increase competition before then, Viterra will also make slots available for other exporters for January to April 2012 at the deep sea terminals at Port Lincoln and Port Adelaide Outer Harbour.

Other features of the access undertaking, including Viterra’s proposed changes, are:

A negotiate/arbitrate model for price and non-price terms of access

Obligations to provide non-discriminatory access

Obligations to negotiate access in good faith

Provisions for arbitration of access disputes

Requirements to publish key port information

“The ACCC welcomes the initiatives proposed by Viterra to provide better access to port terminal services in South Australia. The proposed new auction system will increase competition and lead to a better outcome for exporters and growers alike,” Sims said.

The ACCC has a role in access arrangements for wheat exporters as part of the deregulation of the wheat industry. Access undertakings are intended to ensure that third party exporters are able to access the port terminals operated by vertically integrated port terminal operators, ensuring competition in the market for the export of bulk wheat.

The ACCC seeks comments from stakeholders on its draft decision, as well as Viterra’s original proposed undertaking and its suggested revisions to its proposed undertaking. These documents are available on the ACCC website (hotlink this www.accc.gov.au).